Iraq Study Group Report

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Iraq Study Group Report

Page 1

The Iraq

Study Group

Report

James A. Baker, III, and

Lee H. Hamilton, Co-Chairs

Lawrence S. Eagleburger,

Vernon E. Jordan, Jr., Edwin Meese III,

Sandra Day O’Connor, Leon E. Panetta, William J. Perry, Charles S. Robb,

Alan K. Simpson

Page 2

Contents

Letter from the Co-Chairs

Executive Summary

I. Assessment

A. Assessment of the Current Situation in Iraq

1. Security

2. Politics

3. Economics

4. International Support

5. Conclusions

B. Consequences of Continued Decline in Iraq

C. Some Alternative Courses in Iraq

1. Precipitate Withdrawal

2. Staying the Course

3. More Troops for Iraq

4. Devolution to Three Regions

D. Achieving Our Goals

II. The Way Forward—A New Approach

A. The External Approach: Building an International Consensus

1. The New Diplomatic Offensive

2. The Iraq International Support Group

3. Dealing with Iran and Syria

4. The Wider Regional Context

B. The Internal Approach: Helping Iraqis Help Themselves

1. Performance on Milestones

Page 3

2. National Reconciliation

3. Security and Military Forces

4. Police and Criminal Justice

5. The Oil Sector

6. U.S. Economic and Reconstruction Assistance

7. Budget Preparation, Presentation, and Review

8. U.S. Personnel

9. Intelligence

Appendices

Letter from the Sponsoring Organizations

Iraq Study Group Plenary Sessions

Iraq Study Group Consultations

Expert Working Groups and Military Senior Advisor Panel

The Iraq Study Group

Iraq Study Group Support

Page 4

Letter from the Co-Chairs

There is no magic formula to solve the problems of Iraq. However, there are actions that can be

taken to improve the situation and protect American interests.

Many Americans are dissatisfied, not just with the situation in Iraq but with the state of

our political debate regarding Iraq. Our political leaders must build a bipartisan approach to

bring a responsible conclusion to what is now a lengthy and costly war. Our country deserves a

debate that prizes substance over rhetoric, and a policy that is adequately funded and sustainable.

The President and Congress must work together. Our leaders must be candid and forthright with

the American people in order to win their support.

No one can guarantee that any course of action in Iraq at this point will stop sectarian

warfare, growing violence, or a slide toward chaos. If current trends continue, the potential

consequences are severe. Because of the role and responsibility of the United States in Iraq, and

the commitments our government has made, the United States has special obligations. Our

country must address as best it can Iraq’s many problems. The United States has long-term

relationships and interests at stake in the Middle East, and needs to stay engaged.

In this consensus report, the ten members of the Iraq Study Group present a new approach

because we believe there is a better way forward. All options have not been exhausted. We

believe it is still possible to pursue different policies that can give Iraq an opportunity for a

better future, combat terrorism, stabilize a critical region of the world, and protect America’s

credibility, interests, and values. Our report makes it clear that the Iraqi government and the

Iraqi people also must act to achieve a stable and hopeful future.

What we recommend in this report demands a tremendous amount of political will and

cooperation by the executive and legislative branches of the U.S. government. It demands

skillful implementation. It demands unity of effort by government agencies. And its success

depends on the unity of the American people in a time of political polarization. Americans can

and must enjoy the right of robust debate within a democracy. Yet U.S. foreign policy is

doomed to failure—as is any course of action in Iraq—if it is not supported by a broad,

sustained consensus. The aim of our report is to move our country toward such a consensus.

We want to thank all those we have interviewed and those who have contributed information

and assisted the Study Group, both inside and outside the U.S. government, in Iraq, and around

the world. We thank the members of the expert working groups, and staff from the sponsoring

organizations. We especially thank our colleagues on the Study Group, who have worked with

us on these difficult issues in a spirit of generosity and bipartisanship.

In presenting our report to the President, Congress, and the American people, we dedicate

it to the men and women—military and civilian—who have served and are serving in Iraq, and

to their families back home. They have demonstrated extraordinary courage and made difficult

sacrifices. Every American is indebted to them.

Page 5

We also honor the many Iraqis who have sacrificed on behalf of their country, and the

members of the Coalition Forces who have stood with us and with the people of Iraq.

James A. Baker, III

Lee H. Hamilton

Page 6

Executive Summary

The situation in Iraq is grave and deteriorating. There is no path that can guarantee success, but

the prospects can be improved.

In this report, we make a number of recommendations for actions to be taken in Iraq, the

United States, and the region. Our most important recommendations call for new and enhanced

diplomatic and political efforts in Iraq and the region, and a change in the primary mission of

U.S. forces in Iraq that will enable the United States to begin to move its combat forces out of

Iraq responsibly. We believe that these two recommendations are equally important and reinforce

one another. If they are effectively implemented, and if the Iraqi government moves forward with

national reconciliation, Iraqis will have an opportunity for a better future, terrorism will be dealt

a blow, stability will be enhanced in an important part of the world, and America’s credibility,

interests, and values will be protected.

The challenges in Iraq are complex. Violence is increasing in scope and lethality. It is fed

by a Sunni Arab insurgency, Shiite militias and death squads, al Qaeda, and widespread

criminality. Sectarian conflict is the principal challenge to stability. The Iraqi people have a

democratically elected government, yet it is not adequately advancing national reconciliation,

providing basic security, or delivering essential services. Pessimism is pervasive.

If the situation continues to deteriorate, the consequences could be severe. A slide toward

chaos could trigger the collapse of Iraq’s government and a humanitarian catastrophe.

Neighboring countries could intervene. Sunni-Shia clashes could spread. Al Qaeda could win a

propaganda victory and expand its base of operations. The global standing of the United States

could be diminished. Americans could become more polarized.

During the past nine months we have considered a full range of approaches for moving

forward. All have flaws. Our recommended course has shortcomings, but we firmly believe that

it includes the best strategies and tactics to positively influence the outcome in Iraq and the

region.

External Approach

The policies and actions of Iraq’s neighbors greatly affect its stability and prosperity. No country

in the region will benefit in the long term from a chaotic Iraq. Yet Iraq’s neighbors are not doing

enough to help Iraq achieve stability. Some are undercutting stability.

The United States should immediately launch a new diplomatic offensive to build an

international consensus for stability in Iraq and the region. This diplomatic effort should include

every country that has an interest in avoiding a chaotic Iraq, including all of Iraq’s neighbors.

Iraq’s neighbors and key states in and outside the region should form a support group to

reinforce security and national reconciliation within Iraq, neither of which Iraq can achieve on its

own.

Page 7

Given the ability of Iran and Syria to influence events within Iraq and their interest in

avoiding chaos in Iraq, the United States should try to engage them constructively. In seeking

to influence the behavior of both countries, the United States has disincentives and incentives

available. Iran should stem the flow of arms and training to Iraq, respect Iraq’s sovereignty and

territorial integrity, and use its influence over Iraqi Shia groups to encourage national

reconciliation. The issue of Iran’s nuclear programs should continue to be dealt with by the five

permanent members of the United Nations Security Council plus Germany. Syria should control

its border with Iraq to stem the flow of funding, insurgents, and terrorists in and out of Iraq.

The United States cannot achieve its goals in the Middle East unless it deals directly with

the Arab-Israeli conflict and regional instability. There must be a renewed and sustained

commitment by the United States to a comprehensive Arab-Israeli peace on all fronts: Lebanon,

Syria, and President Bush’s June 2002 commitment to a two-state solution for Israel and

Palestine. This commitment must include direct talks with, by, and between Israel, Lebanon,

Palestinians (those who accept Israel’s right to exist), and Syria.

As the United States develops its approach toward Iraq and the Middle East, the United

States should provide additional political, economic, and military support for Afghanistan,

including resources that might become available as combat forces are moved out of Iraq.

Internal Approach

The most important questions about Iraq’s future are now the responsibility of Iraqis. The

United States must adjust its role in Iraq to encourage the Iraqi people to take control of their

own destiny.

The Iraqi government should accelerate assuming responsibility for Iraqi security by

increasing the number and quality of Iraqi Army brigades. While this process is under way, and

to facilitate it, the United States should significantly increase the number of U.S. military

personnel, including combat troops, imbedded in and supporting Iraqi Army units. As these

actions proceed, U.S. combat forces could begin to move out of Iraq.

The primary mission of U.S. forces in Iraq should evolve to one of supporting the Iraqi

army, which would take over primary responsibility for combat operations. By the first quarter

of 2008, subject to unexpected developments in the security situation on the ground, all combat

brigades not necessary for force protection could be out of Iraq. At that time, U.S. combat forces

in Iraq could be deployed only in units embedded with Iraqi forces, in rapid-reaction and special

operations teams, and in training, equipping, advising, force protection, and search and rescue.

Intelligence and support efforts would continue. A vital mission of those rapid reaction and

special operations forces would be to undertake strikes against al Qaeda in Iraq.

It is clear that the Iraqi government will need assistance from the United States for some

time to come, especially in carrying out security responsibilities. Yet the United States must

make it clear to the Iraqi government that the United States could carry out its plans, including

planned redeployments, even if the Iraqi government did not implement their planned changes.

The United States must not make an open-ended commitment to keep large numbers of

American troops deployed in Iraq.

Page 8

As redeployment proceeds, military leaders should emphasize training and education of

forces that have returned to the United States in order to restore the force to full combat

capability. As equipment returns to the United States, Congress should appropriate sufficient

funds to restore the equipment over the next five years.

The United States should work closely with Iraq’s leaders to support the achievement of

specific objectives—or milestones—on national reconciliation, security, and governance.

Miracles cannot be expected, but the people of Iraq have the right to expect action and progress.

The Iraqi government needs to show its own citizens—and the citizens of the United States and

other countries—that it deserves continued support.

Prime Minister Nouri al-Maliki, in consultation with the United States, has put forward a

set of milestones critical for Iraq. His list is a good start, but it must be expanded to include

milestones that can strengthen the government and benefit the Iraqi people. President Bush and

his national security team should remain in close and frequent contact with the Iraqi leadership

to convey a clear message: there must be prompt action by the Iraqi government to make

substantial progress toward the achievement of these milestones.

If the Iraqi government demonstrates political will and makes substantial progress toward

the achievement of milestones on national reconciliation, security, and governance, the United

States should make clear its willingness to continue training, assistance, and support for Iraq’s

security forces and to continue political, military, and economic support. If the Iraqi government

does not make substantial progress toward the achievement of milestones on national

reconciliation, security, and governance, the United States should reduce its political, military,

or economic support for the Iraqi government.

Our report makes recommendations in several other areas. They include improvements to

the Iraqi criminal justice system, the Iraqi oil sector, the U.S. reconstruction efforts in Iraq, the

U.S. budget process, the training of U.S. government personnel, and U.S. intelligence -

capabilities.

Conclusion

It is the unanimous view of the Iraq Study Group that these recommendations offer a new way

forward for the United States in Iraq and the region. They are comprehensive and need to be

implemented in a coordinated fashion. They should not be separated or carried out in isolation.

The dynamics of the region are as important to Iraq as events within Iraq.

The challenges are daunting. There will be difficult days ahead. But by pursuing this new

way forward, Iraq, the region, and the United States of America can emerge stronger.

Page 9

Assessment

There is no guarantee for success in Iraq. The situation in Baghdad and several provinces is dire.

Saddam Hussein has been removed from power and the Iraqi people have a democratically

elected government that is broadly representative of Iraq’s population, yet the government is not

adequately advancing national reconciliation, providing basic security, or delivering essential

services. The level of violence is high and growing. There is great suffering, and the daily lives

of many Iraqis show little or no improvement. Pessimism is pervasive.

U.S. military and civilian personnel, and our coalition partners, are making exceptional

and dedicated efforts—and sacrifices—to help Iraq. Many Iraqis have also made extraordinary

efforts and sacrifices for a better future. However, the ability of the United States to influence

events within Iraq is diminishing. Many Iraqis are embracing sectarian identities. The lack of

security impedes economic development. Most countries in the region are not playing a

constructive role in support of Iraq, and some are undercutting stability.

Iraq is vital to regional and even global stability, and is critical to U.S. interests. It runs

along the sectarian fault lines of Shia and Sunni Islam, and of Kurdish and Arab populations. It

has the world’s second-largest known oil reserves. It is now a base of operations for international

terrorism, including al Qaeda.

Iraq is a centerpiece of American foreign policy, influencing how the United States is

viewed in the region and around the world. Because of the gravity of Iraq’s condition and the

country’s vital importance, the United States is facing one of its most difficult and significant

international challenges in decades. Because events in Iraq have been set in motion by American

decisions and actions, the United States has both a national and a moral interest in doing what

it can to give Iraqis an opportunity to avert anarchy.

An assessment of the security, political, economic, and regional situation follows (all

figures current as of publication), along with an assessment of the consequences if Iraq continues

to deteriorate, and an analysis of some possible courses of action.

Page 10

A. Assessment of the Current

Situation in Iraq

1. Security

Attacks against U.S., Coalition, and Iraqi security forces are persistent and growing. October

2006 was the deadliest month for U.S. forces since January 2005, with 102 Americans killed.

Total attacks in October 2006 averaged 180 per day, up from 70 per day in January 2006. Daily

attacks against Iraqi security forces in October were more than double the level in January.

Attacks against civilians in October were four times higher than in January. Some 3,000 Iraqi

civilians are killed every month.

Sources of Violence

Violence is increasing in scope, complexity, and lethality. There are multiple sources of

violence in Iraq: the Sunni Arab insurgency, al Qaeda and affiliated jihadist groups, Shiite

militias and death squads, and organized criminality. Sectarian violence—particularly in and

around Baghdad—has become the principal challenge to stability.

Most attacks on Americans still come from the Sunni Arab insurgency. The insurgency

comprises former elements of the Saddam Hussein regime, disaffected Sunni Arab Iraqis, and

common criminals. It has significant support within the Sunni Arab community. The

insurgency has no single leadership but is a network of networks. It benefits from participants’

detailed knowledge of Iraq’s infrastructure, and arms and financing are supplied primarily from

within Iraq. The insurgents have different goals, although nearly all oppose the presence of U.S.

forces in Iraq. Most wish to restore Sunni Arab rule in the country. Some aim at winning local

power and control.

Al Qaeda is responsible for a small portion of the violence in Iraq, but that includes some

of the more spectacular acts: suicide attacks, large truck bombs, and attacks on significant -

religious or political targets. Al Qaeda in Iraq is now largely Iraqi-run and composed of Sunni

Arabs. Foreign fighters—numbering an estimated 1,300—play a supporting role or carry out

suicide operations. Al Qaeda’s goals include instigating a wider sectarian war between Iraq’s

Sunni and Shia, and driving the United States out of Iraq.

Sectarian violence causes the largest number of Iraqi civilian casualties. Iraq is in the grip

of a deadly cycle: Sunni insurgent attacks spark large-scale Shia reprisals, and vice versa. Groups

of Iraqis are often found bound and executed, their bodies dumped in rivers or fields. The

perception of unchecked violence emboldens militias, shakes confidence in the government, and

leads Iraqis to flee to places where their sect is the majority and where they feel they are in less

danger. In some parts of Iraq—notably in Baghdad—sectarian cleansing is taking place. The

United Nations estimates that 1.6 million are displaced within Iraq, and up to 1.8 million Iraqis

have fled the country.

Page 11

Shiite militias engaging in sectarian violence pose a substantial threat to immediate and

long-term stability. These militias are diverse. Some are affiliated with the government, some

are highly localized, and some are wholly outside the law. They are fragmenting, with an

increasing breakdown in command structure. The militias target Sunni Arab civilians, and some

struggle for power in clashes with one another. Some even target government ministries. They

undermine the authority of the Iraqi government and security forces, as well as the ability of

Sunnis to join a peaceful political process. The prevalence of militias sends a powerful message:

political leaders can preserve and expand their power only if backed by armed force.

The Mahdi Army, led by Moqtada al-Sadr, may number as many as 60,000 fighters. It has

directly challenged U.S. and Iraqi government forces, and it is widely believed to engage in

regular violence against Sunni Arab civilians. Mahdi fighters patrol certain Shia enclaves,

notably northeast Baghdad’s teeming neighborhood of 2.5 million known as “Sadr City.” As

the Mahdi Army has grown in size and influence, some elements have moved beyond Sadr’s

control.

The Badr Brigade is affiliated with the Supreme Council for the Islamic Revolution in Iraq

(SCIRI), which is led by Abdul Aziz al-Hakim. The Badr Brigade has long-standing ties with

the Iranian Revolutionary Guard Corps. Many Badr members have become integrated into the

Iraqi police, and others play policing roles in southern Iraqi cities. While wearing the uniform of

the security services, Badr fighters have targeted Sunni Arab civilians. Badr fighters have also

clashed with the Mahdi Army, particularly in southern Iraq.

Criminality also makes daily life unbearable for many Iraqis. Robberies, kidnappings, and

murder are commonplace in much of the country. Organized criminal rackets thrive, particularly

in unstable areas like Anbar province. Some criminal gangs cooperate with, finance, or purport

to be part of the Sunni insurgency or a Shiite militia in order to gain legitimacy. As one

knowledgeable American official put it, “If there were foreign forces in New Jersey, Tony

Soprano would be an insurgent leader.”

Four of Iraq’s eighteen provinces are highly insecure—Baghdad, Anbar, Diyala, and Salah

ad Din. These provinces account for about 40 percent of Iraq’s population of 26 million. In

Baghdad, the violence is largely between Sunni and Shia. In Anbar, the violence is attributable

to the Sunni insurgency and to al Qaeda, and the situation is deteriorating.

In Kirkuk, the struggle is between Kurds, Arabs, and Turkmen. In Basra and the south,

the violence is largely an intra-Shia power struggle. The most stable parts of the country are the

three provinces of the Kurdish north and parts of the Shia south. However, most of Iraq’s cities

have a sectarian mix and are plagued by persistent violence.

U.S., Coalition, and Iraqi Forces

Confronting this violence are the Multi-National Forces–Iraq under U.S. command, working in

concert with Iraq’s security forces. The Multi-National Forces–Iraq were authorized by UN

Security Council Resolution 1546 in 2004, and the mandate was extended in November 2006

for another year.

Page 12

Approximately 141,000 U.S. military personnel are serving in Iraq, together with

approximately 16,500 military personnel from twenty-seven coalition partners, the largest

contingent being 7,200 from the United Kingdom. The U.S. Army has principal responsibility

for Baghdad and the north. The U.S. Marine Corps takes the lead in Anbar province. The

United Kingdom has responsibility in the southeast, chiefly in Basra.

Along with this military presence, the United States is building its largest embassy in

Baghdad. The current U.S. embassy in Baghdad totals about 1,000 U.S. government

employees. There are roughly 5,000 civilian contractors in the country.

Currently, the U.S. military rarely engages in large-scale combat operations. Instead,

counterinsurgency efforts focus on a strategy of “clear, hold, and build”—“clearing” areas of -

insurgents and death squads, “holding” those areas with Iraqi security forces, and “building”

areas with quick-impact reconstruction projects.

Nearly every U.S. Army and Marine combat unit, and several National Guard and Reserve

units, have been to Iraq at least once. Many are on their second or even third rotations; rotations

are typically one year for Army units, seven months for Marine units. Regular rotations, in and

out of Iraq or within the country, complicate brigade and battalion efforts to get to know the

local scene, earn the trust of the population, and build a sense of cooperation.

Many military units are under significant strain. Because the harsh conditions in Iraq are

wearing out equipment more quickly than anticipated, many units do not have fully functional

equipment for training when they redeploy to the United States. An extraordinary amount of

sacrifice has been asked of our men and women in uniform, and of their families. The American

military has little reserve force to call on if it needs ground forces to respond to other crises

around the world.

A primary mission of U.S. military strategy in Iraq is the training of competent Iraqi

security forces. By the end of 2006, the Multi-National Security Transition Command–Iraq

under American leadership is expected to have trained and equipped a target number of

approximately 326,000 Iraqi security services. That figure includes 138,000 members of the

Iraqi Army and 188,000 Iraqi police. Iraqis have operational control over roughly one-third of

Iraqi security forces; the U.S. has operational control over most of the rest. No U.S. forces are

under Iraqi command.

The Iraqi Army

The Iraqi Army is making fitful progress toward becoming a reliable and disciplined fighting

force loyal to the national government. By the end of 2006, the Iraqi Army is expected to

comprise 118 battalions formed into 36 brigades under the command of 10 divisions. Although

the Army is one of the more professional Iraqi institutions, its performance has been uneven.

The training numbers are impressive, but they represent only part of the story.

Significant questions remain about the ethnic composition and loyalties of some Iraqi

units—specifically, whether they will carry out missions on behalf of national goals instead of a

sectarian agenda. Of Iraq’s 10 planned divisions, those that are even-numbered are made up of

Iraqis who signed up to serve in a specific area, and they have been reluctant to redeploy to other

areas of the country. As a result, elements of the Army have refused to carry out missions.

The Iraqi Army is also confronted by several other significant challenges:

Page 13

Units lack leadership. They lack the ability to work together and perform at higher levels of

organization the brigade and division level. Leadership training and the experience of

leadership are the essential elements to improve performance.

Units lack equipment. They cannot carry out their missions without adequate equipment.

Congress has been generous in funding requests for U.S. troops, but it has resisted fully

funding Iraqi forces. The entire appropriation for Iraqi defense forces for FY 2006 ($3 billion)

is less than the United States currently spends in Iraq every two weeks.

Units lack personnel. Soldiers are on leave one week a month so that they can visit their

families and take them their pay. Soldiers are paid in cash because there is no banking

system. Soldiers are given leave liberally and face no penalties for absence without leave. Unit

readiness rates are low, often at 50 percent or less.

Units lack logistics and support. They lack the ability to sustain their operations, the

capability to transport supplies and troops, and the capacity to provide their own indirect fire

support, close-air support, technical intelligence, and medical evacuation. They will depend

on the United States for logistics and support through at least 2007.

The Iraqi Police

The state of the Iraqi police is substantially worse than that of the Iraqi Army. The Iraqi Police

Service currently numbers roughly 135,000 and is responsible for local policing. It has neither

the training nor legal authority to conduct criminal investigations, nor the firepower to take on

organized crime, insurgents, or militias. The Iraqi National Police numbers roughly 25,000 and

its officers have been trained in counterinsurgency operations, not police work. The Border

Enforcement Department numbers roughly 28,000.

Iraqi police cannot control crime, and they routinely engage in sectarian violence,

including the unnecessary detention, torture, and targeted execution of Sunni Arab civilians. The

police are organized under the Ministry of the Interior, which is confronted by corruption and

militia infiltration and lacks control over police in the provinces.

The United States and the Iraqi government recognize the importance of reform. The

current Minister of the Interior has called for purging militia members and criminals from the

police. But he has little police experience or base of support. There is no clear Iraqi or U.S.

agreement on the character and mission of the police. U.S. authorities do not know with

precision the composition and membership of the various police forces, nor the disposition of

their funds and equipment. There are ample reports of Iraqi police officers participating in

training in order to obtain a weapon, uniform, and ammunition for use in sectarian violence.

Some are on the payroll but don’t show up for work. In the words of a senior American general,

“2006 was supposed to be ‘the year of the police’ but it hasn’t materialized that way.”

Page 14

Facilities Protection Services

The Facilities Protection Service poses additional problems. Each Iraqi ministry has an armed

unit, ostensibly to guard the ministry’s infrastructure. All together, these units total roughly

145,000 uniformed Iraqis under arms. However, these units have questionable loyalties and

capabilities. In the ministries of Health, Agriculture, and Transportation controlled by Moqtada

al-Sadr the Facilities Protection Service is a source of funding and jobs for the Mahdi Army.

One senior U.S. official described the Facilities Protection Service as “incompetent,

dysfunctional, or subversive.” Several Iraqis simply referred to them as militias.

The Iraqi government has begun to bring the Facilities Protection Service under the

control of the Interior Ministry. The intention is to identify and register Facilities Protection

personnel, standardize their treatment, and provide some training. Though the approach is

reasonable, this effort may exceed the current capability of the Interior Ministry.

Page 15

Operation Together Forward II

In a major effort to quell the violence in Iraq, U.S. military forces joined with Iraqi forces

to establish security in Baghdad with an operation called “Operation Together Forward

II,” which began in August 2006. Under Operation Together Forward II, U.S. forces are

working with members of the Iraqi Army and police to “clear, hold, and build” in

Baghdad, moving neighborhood by neighborhood. There are roughly 15,000 U.S. troops

in Baghdad.

This operation—and the security of Baghdad—is crucial to security in Iraq more

generally. A capital city of more than 6 million, Baghdad contains some 25 percent of the

country’s population. It is the largest Sunni and Shia city in Iraq. It has high

concentrations of both Sunni insurgents and Shiite militias. Both Iraqi and American

leaders told us that as Baghdad goes, so goes Iraq.

The results of Operation Together Forward II are disheartening. Violence in

Baghdad—already at high levels—jumped more than 43 percent between the summer and

October 2006. U.S. forces continue to suffer high casualties. Perpetrators of violence leave

neighborhoods in advance of security sweeps, only to filter back later. Iraqi police have

been unable or unwilling to stop such infiltration and continuing violence. The Iraqi Army

has provided only two out of the six battalions that it promised in August would join

American forces in Baghdad. The Iraqi government has rejected sustained security

operations in Sadr City.

Security efforts will fail unless the Iraqis have both the capability to hold areas that

have been cleared and the will to clear neighborhoods that are home to Shiite militias.

U.S. forces can “clear” any neighborhood, but there are neither enough U.S. troops present

nor enough support from Iraqi security forces to “hold” neighborhoods so cleared. The

same holds true for the rest of Iraq. Because none of the operations conducted by U.S. and

Iraqi military forces are fundamentally changing the conditions encouraging the sectarian

violence, U.S. forces seem to be caught in a mission that has no foreseeable end.

2. Politics

Iraq is a sovereign state with a democratically elected Council of Representatives. A government

of national unity was formed in May 2006 that is broadly representative of the Iraqi people. Iraq

has ratified a constitution, and—per agreement with Sunni Arab leaders—has initiated a process

of review to determine if the constitution needs amendment.

The composition of the Iraqi government is basically sectarian, and key players within the

government too often act in their sectarian interest. Iraq’s Shia, Sunni, and Kurdish leaders

frequently fail to demonstrate the political will to act in Iraq’s national interest, and too many

Iraqi ministries lack the capacity to govern effectively. The result is an even weaker central

government than the constitution provides.

Page 16

There is widespread Iraqi, American, and international agreement on the key issues

confronting the Iraqi government: national reconciliation, including the negotiation of a

“political deal” among Iraq’s sectarian groups on Constitution review, de-Baathification, oil

revenue sharing, provincial elections, the future of Kirkuk, and amnesty; security, particularly

curbing militias and reducing the violence in Baghdad; and governance, including the provision

of basic services and the rollback of pervasive corruption. Because Iraqi leaders view issues

through a sectarian prism, we will summarize the differing perspectives of Iraq’s main sectarian

groups.

Sectarian Viewpoints

The Shia, the majority of Iraq’s population, have gained power for the first time in more than

1,300 years. Above all, many Shia are interested in preserving that power. However, fissures

have emerged within the broad Shia coalition, known as the United Iraqi Alliance. Shia factions

are struggling for power—over regions, ministries, and Iraq as a whole. The difficulties in

holding together a broad and fractious coalition have led several observers in Baghdad to

comment that Shia leaders are held “hostage to extremes.” Within the coalition as a whole,

there is a reluctance to reach a political accommodation with the Sunnis or to disarm Shiite

militias.

Prime Minister Nouri al-Maliki has demonstrated an understanding of the key issues facing

Iraq, notably the need for national reconciliation and security in Baghdad. Yet strains have

emerged between Maliki’s government and the United States. Maliki has publicly rejected a

U.S. timetable to achieve certain benchmarks, ordered the removal of blockades around Sadr

City, sought more control over Iraqi security forces, and resisted U.S. requests to move forward

on reconciliation or on disbanding Shiite militias.

Sistani, Sadr, Hakim

The U.S. deals primarily with the Iraqi government, but the most powerful Shia figures in

Iraq do not hold national office. Of the following three vital power brokers in the Shia

community, the United States is unable to talk directly with one (Grand Ayatollah Ali al-

Sistani) and does not talk to another (Moqtada al-Sadr).

GRAND AYATOLLAH ALI AL-SISTANI: Sistani is the leading Shiite cleric in Iraq.

Despite staying out of day-to-day politics, he has been the most influential leader in the

country: all major Shia leaders have sought his approval or guidance. Sistani has

encouraged a unified Shia bloc with moderated aims within a unified Iraq. Sistani’s

influence may be waning, as his words have not succeeded in preventing intra-Shia

violence or retaliation against Sunnis.

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ABDUL AZIZ AL-HAKIM: Hakim is a cleric and the leader of the Supreme Council for

the Islamic Revolution in Iraq (SCIRI), the largest and most organized Shia political

party. It seeks the creation of an autonomous Shia region comprising nine provinces in the

south. Hakim has consistently protected and advanced his party’s position. SCIRI has

close ties with Iran.

MOQTADA AL-SADR: Sadr has a large following among impoverished Shia,

particularly in Baghdad. He has joined Maliki’s governing coalition, but his Mahdi Army

has clashed with the Badr Brigades, as well as with Iraqi, U.S., and U.K. forces. Sadr

claims to be an Iraqi nationalist. Several observers remarked to us that Sadr was following

the model of Hezbollah in Lebanon: building a political party that controls basic services

within the government and an armed militia outside of the government.

Sunni Arabs feel displaced because of the loss of their traditional position of power in Iraq. They

are torn, unsure whether to seek their aims through political participation or through violent

insurgency. They remain angry about U.S. decisions to dissolve Iraqi security forces and to

pursue the “de-Baathification” of Iraq’s government and society. Sunnis are confronted by

paradoxes: they have opposed the presence of U.S. forces in Iraq but need those forces to protect

them against Shia militias; they chafe at being governed by a majority Shia administration but

reject a federal, decentralized Iraq and do not see a Sunni autonomous region as feasible for

themselves.

Hashimi and Dhari

The influence of Sunni Arab politicians in the government is questionable. The leadership

of the Sunni Arab insurgency is murky, but the following two key Sunni Arab figures have

broad support.

tariq al-hashimi: Hashimi is one of two vice presidents of Iraq and the head of the Iraqi

Islamic Party, the largest Sunni Muslim bloc in parliament. Hashimi opposes the

formation of autonomous regions and has advocated the distribution of oil revenues based

on population, a reversal of de-Baathification, and the removal of Shiite militia fighters

from the Iraqi security forces. Shiite death squads have recently killed three of his siblings.

sheik harith al-dhari: Dhari is the head of the Muslim Scholars Association, the most

influential Sunni organization in Iraq. Dhari has condemned the American occupation and

spoken out against the Iraqi government. His organization has ties both to the Sunni Arab

insurgency and to Sunnis within the Iraqi government. A warrant was recently issued for

his arrest for inciting violence and terrorism, an act that sparked bitter Sunni protests

across Iraq.

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Iraqi Kurds have succeeded in presenting a united front of two main political blocs—the

Kurdistan Democratic Party (KDP) and the Patriotic Union of Kurdistan (PUK). The Kurds have

secured a largely autonomous Kurdish region in the north, and have achieved a prominent role

for Kurds within the national government. Barzani leads the Kurdish regional government, and

Talabani is president of Iraq.

Leading Kurdish politicians told us they preferred to be within a democratic, federal Iraqi

state because an independent Kurdistan would be surrounded by hostile neighbors. However, a

majority of Kurds favor independence. The Kurds have their own security forces—the

peshmerga—which number roughly 100,000. They believe they could accommodate themselves

to either a unified or a fractured Iraq.

Barzani and Talabani

Kurdish politics has been dominated for years by two figures who have long-standing ties

in movements for Kurdish independence and self-government.

MASSOUD BARZANI: Barzani is the leader of the Kurdistan Democratic Party and the

President of the Kurdish regional government. Barzani has cooperated with his longtime

rival, Jalal Talabani, in securing an empowered, autonomous Kurdish region in northern

Iraq. Barzani has ordered the lowering of Iraqi flags and raising of Kurdish flags in

Kurdish-controlled areas.

JALAL TALABANI: Talabani is the leader of the Patriotic Union of Kurdistan and the

President of Iraq. Whereas Barzani has focused his efforts in Kurdistan, Talabani has

secured power in Baghdad, and several important PUK government ministers are loyal to

him. Talabani strongly supports autonomy for Kurdistan. He has also sought to bring real

power to the office of the presidency.

Key Issues

NATIONAL RECONCILIATION. Prime Minister Maliki outlined a commendable program of

national reconciliation soon after he entered office. However, the Iraqi government has not taken

action on the key elements of national reconciliation: revising de-Baathification, which prevents

many Sunni Arabs from participating in governance and society; providing amnesty for those

who have fought against the government; sharing the country’s oil revenues; demobilizing

militias; amending the constitution; and settling the future of Kirkuk.

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One core issue is federalism. The Iraqi Constitution, which created a largely autonomous

Kurdistan region, allows other such regions to be established later, perhaps including a

“Shi’astan” comprising nine southern provinces. This highly decentralized structure is favored

by the Kurds and many Shia (particularly supporters of Abdul Aziz al-Hakim), but it is

anathema to Sunnis. First, Sunni Arabs are generally Iraqi nationalists, albeit within the context

of an Iraq they believe they should govern. Second, because Iraq’s energy resources are in the

Kurdish and Shia regions, there is no economically feasible “Sunni region.” Particularly

contentious is a provision in the constitution that shares revenues nationally from current oil

reserves, while allowing revenues from reserves discovered in the future to go to the regions.

The Sunnis did not actively participate in the constitution-drafting process, and acceded to

entering the government only on the condition that the constitution be amended. In September,

the parliament agreed to initiate a constitutional review commission slated to complete its work

within one year; it delayed considering the question of forming a federalized region in southern

Iraq for eighteen months.

Another key unresolved issue is the future of Kirkuk, an oil-rich city in northern Iraq that

is home to substantial numbers of Kurds, Arabs, and Turkmen. The Kurds insisted that the

constitution require a popular referendum by December 2007 to determine whether Kirkuk can

formally join the Kurdish administered region, an outcome that Arabs and Turkmen in Kirkuk

staunchly oppose. The risks of further violence sparked by a Kirkuk referendum are great.

Iraq’s leaders often claim that they do not want a division of the country, but we found

that key Shia and Kurdish leaders have little commitment to national reconciliation. One

prominent Shia leader told us pointedly that the current government has the support of 80

percent of the population, notably excluding Sunni Arabs. Kurds have fought for independence

for decades, and when our Study Group visited Iraq, the leader of the Kurdish region ordered the

lowering of Iraqi flags and the raising of Kurdish flags. One senior American general commented

that the Iraqis “still do not know what kind of country they want to have.” Yet many of Iraq’s

most powerful and well-positioned leaders are not working toward a united Iraq.

SECURITY. The security situation cannot improve unless leaders act in support of national

reconciliation. Shiite leaders must make the decision to demobilize militias. Sunni Arabs must

make the decision to seek their aims through a peaceful political process, not through violent

revolt. The Iraqi government and Sunni Arab tribes must aggressively pursue al Qaeda.

Militias are currently seen as legitimate vehicles of political action. Shia political leaders

make distinctions between the Sunni insurgency (which seeks to overthrow the government) and

Shia militias (which are used to fight Sunnis, secure neighborhoods, and maximize power

within the government). Though Prime Minister Maliki has said he will address the problem of

militias, he has taken little meaningful action to curb their influence. He owes his office in large

part to Sadr and has shown little willingness to take on him or his Mahdi Army.

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Sunni Arabs have not made the strategic decision to abandon violent insurgency in favor of

the political process. Sunni politicians within the government have a limited level of support

and influence among their own population, and questionable influence over the insurgency.

Insurgents wage a campaign of intimidation against Sunni leaders—assassinating the family

members of those who do participate in the government. Too often, insurgents tolerate and

cooperate with al Qaeda, as they share a mutual interest in attacking U.S. and Shia forces.

However, Sunni Arab tribal leaders in Anbar province recently took the positive step of agreeing

to pursue al Qaeda and foreign fighters in their midst, and have started to take action on those

commitments.

Sunni politicians told us that the U.S. military has to take on the militias; Shia

politicians told us that the U.S. military has to help them take out the Sunni insurgents and al

Qaeda. Each side watches the other. Sunni insurgents will not lay down arms unless the Shia

militias are disarmed. Shia militias will not disarm until the Sunni insurgency is destroyed. To

put it simply: there are many armed groups within Iraq, and very little will to lay down arms.

GOVERNANCE. The Iraqi government is not effectively providing its people with basic ser-

vices: electricity, drinking water, sewage, health care, and education. In many sectors,

production is below or hovers around prewar levels. In Baghdad and other unstable areas, the

situation is much worse. There are five major reasons for this problem.

First, the government sometimes provides services on a sectarian basis. For example, in

one Sunni neighborhood of Shia-governed Baghdad, there is less than two hours of electricity

each day and trash piles are waist-high. One American official told us that Baghdad is run like a

“Shia dictatorship” because Sunnis boycotted provincial elections in 2005, and therefore are not

represented in local government.

Second, security is lacking. Insurgents target key infrastructure. For instance, electricity

transmission towers are downed by explosives, and then sniper attacks prevent repairs from

being made.

Third, corruption is rampant. One senior Iraqi official estimated that official corruption

costs Iraq $5–7 billion per year. Notable steps have been taken: Iraq has a functioning audit

board and inspectors general in the ministries, and senior leaders including the Prime Minister

have identified rooting out corruption as a national priority. But too many political leaders still

pursue their personal, sectarian, or party interests. There are still no examples of senior officials

who have been brought before a court of law and convicted on corruption charges.

Fourth, capacity is inadequate. Most of Iraq’s technocratic class was pushed out of the

government as part of de-Baathification. Other skilled Iraqis have fled the country as violence has

risen. Too often, Iraq’s elected representatives treat the ministries as political spoils. Many

ministries can do little more than pay salaries, spending as little as 10–15 percent of their capital

budget. They lack technical expertise and suffer from corruption, inefficiency, a banking system

that does not permit the transfer of moneys, extensive red tape put in place in part to deter

corruption, and a Ministry of Finance reluctant to disburse funds.

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Fifth, the judiciary is weak. Much has been done to establish an Iraqi judiciary, including

a supreme court, and Iraq has some dedicated judges. But criminal investigations are conducted

by magistrates, and they are too few and inadequately trained to perform this function.

Intimidation of the Iraqi judiciary has been ruthless. As one senior U.S. official said to us, “We

can protect judges, but not their families, their extended families, their friends.” Many Iraqis feel

that crime not only is unpunished, it is rewarded.

3. Economics

There has been some economic progress in Iraq, and Iraq has tremendous potential for growth.

But economic development is hobbled by insecurity, corruption, lack of investment, dilapidated

infrastructure, and uncertainty. As one U.S. official observed to us, Iraq’s economy has been

badly shocked and is dysfunctional after suffering decades of problems: Iraq had a police state

economy in the 1970s, a war economy in the 1980s, and a sanctions economy in the 1990s.

Immediate and long-term growth depends predominantly on the oil sector.

Economic Performance

There are some encouraging signs. Currency reserves are stable and growing at $12 billion.

Consumer imports of computers, cell phones, and other appliances have increased dramatically.

New businesses are opening, and construction is moving forward in secure areas. Because of

Iraq’s ample oil reserves, water resources, and fertile lands, significant growth is possible if

violence is reduced and the capacity of government improves. For example, wheat yields

increased more than 40 percent in Kurdistan during this past year.

The Iraqi government has also made progress in meeting benchmarks set by the

International Monetary Fund. Most prominently, subsidies have been reduced—for instance, the

price per liter of gas has increased from roughly 1.7 cents to 23 cents (a figure far closer to

regional prices). However, energy and food subsidies generally remain a burden, costing Iraq $11

billion per year.

Despite the positive signs, many leading economic indicators are negative. Instead of

meeting a target of 10 percent, growth in Iraq is at roughly 4 percent this year. Inflation is above

50 percent. Unemployment estimates range widely from 20 to 60 percent. The investment

climate is bleak, with foreign direct investment under 1 percent of GDP. Too many Iraqis do not

see tangible improvements in their daily economic situation.

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Oil Sector

Oil production and sales account for nearly 70 percent of Iraq’s GDP, and more than 95 percent

of government revenues. Iraq produces around 2.2 million barrels per day, and exports about 1.5

million barrels per day. This is below both prewar production levels and the Iraqi government’s

target of 2.5 million barrels per day, and far short of the vast potential of the Iraqi oil sector.

Fortunately for the government, global energy prices have been higher than projected, making it

possible for Iraq to meet its budget revenue targets.

Problems with oil production are caused by lack of security, lack of investment, and lack

of technical capacity. Insurgents with a detailed knowledge of Iraq’s infrastructure target

pipelines and oil facilities. There is no metering system for the oil. There is poor maintenance at

pumping stations, pipelines, and port facilities, as well as inadequate investment in modern

technology. Iraq had a cadre of experts in the oil sector, but intimidation and an extended

migration of experts to other countries have eroded technical capacity. Foreign companies have

been reluctant to invest, and Iraq’s Ministry of Oil has been unable to spend more than 15

percent of its capital budget.

Corruption is also debilitating. Experts estimate that 150,000 to 200,000—and perhaps as

many as 500,000—barrels of oil per day are being stolen. Controlled prices for refined products

result in shortages within Iraq, which drive consumers to the thriving black market. One senior

U.S. official told us that corruption is more responsible than insurgents for breakdowns in the

oil sector.

The Politics of Oil

The politics of oil has the potential to further damage the country’s already fragile efforts to

create a unified central government. The Iraqi Constitution leaves the door open for regions to

take the lead in developing new oil resources. Article 108 states that “oil and gas are the

ownership of all the peoples of Iraq in all the regions and governorates,” while Article 109 tasks

the federal government with “the management of oil and gas extracted from current fields.” This

language has led to contention over what constitutes a “new” or an “existing” resource, a

question that has profound ramifications for the ultimate control of future oil revenue.

Senior members of Iraq’s oil industry argue that a national oil company could reduce

political tensions by centralizing revenues and reducing regional or local claims to a percentage

of the revenue derived from production. However, regional leaders are suspicious and resist this

proposal, affirming the rights of local communities to have direct access to the inflow of oil

revenue. Kurdish leaders have been particularly aggressive in asserting independent control of

their oil assets, signing and implementing investment deals with foreign oil companies in

northern Iraq. Shia politicians are also reported to be negotiating oil investment contracts with

foreign companies.

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There are proposals to redistribute a portion of oil revenues directly to the population on a

per capita basis. These proposals have the potential to give all Iraqi citizens a stake in the

nation’s chief natural resource, but it would take time to develop a fair distribution system. Oil

revenues have been incorporated into state budget projections for the next several years. There is

no institution in Iraq at present that could properly implement such a distribution system. It

would take substantial time to establish, and would have to be based on a well-developed state

census and income tax system, which Iraq currently lacks.

U.S.-Led Reconstruction Efforts

The United States has appropriated a total of about $34 billion to support the reconstruction of

Iraq, of which about $21 billion has been appropriated for the “Iraq Relief and Reconstruction

Fund.” Nearly $16 billion has been spent, and almost all the funds have been committed. The

administration requested $1.6 billion for reconstruction in FY 2006, and received $1.485

billion. The administration requested $750 million for FY 2007. The trend line for economic

assistance in FY 2008 also appears downward.

Congress has little appetite for appropriating more funds for reconstruction. There is a

substantial need for continued reconstruction in Iraq, but serious questions remain about the

capacity of the U.S. and Iraqi governments.

The coordination of assistance programs by the Defense Department, State Department,

United States Agency for International Development, and other agencies has been ineffective.

There are no clear lines establishing who is in charge of reconstruction.

As resources decline, the U.S. reconstruction effort is changing its focus, shifting from

infrastructure, education, and health to smaller-scale ventures that are chosen and to some degree

managed by local communities. A major attempt is also being made to improve the capacity of

government bureaucracies at the national, regional, and provincial levels to provide services to

the population as well as to select and manage infrastructure projects.

The United States has people embedded in several Iraqi ministries, but it confronts

problems with access and sustainability. Moqtada al-Sadr objects to the U.S. presence in Iraq,

and therefore the ministries he controls—Health, Agriculture, and Transportation—will not

work with Americans. It is not clear that Iraqis can or will maintain and operate reconstruction

projects launched by the United States.

Several senior military officers commented to us that the Commander’s Emergency

Response Program, which funds quick-impact projects such as the clearing of sewage and the

restoration of basic services, is vital. The U.S. Agency for International Development, in

contrast, is focused on long-term economic development and capacity building, but funds have

not been committed to support these efforts into the future. The State Department leads seven

Provincial Reconstruction Teams operating around the country. These teams can have a positive

effect in secure areas, but not in areas where their work is hampered by significant security

constraints.

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Substantial reconstruction funds have also been provided to contractors, and the Special

Inspector General for Iraq Reconstruction has documented numerous instances of waste and

abuse. They have not all been put right. Contracting has gradually improved, as more oversight

has been exercised and fewer cost-plus contracts have been granted; in addition, the use of Iraqi

contractors has enabled the employment of more Iraqis in reconstruction projects.

4. International Support

International support for Iraqi reconstruction has been tepid. International donors pledged $13.5

billion to support reconstruction, but less than $4 billion has been delivered.

An important agreement with the Paris Club relieved a significant amount of Iraq’s

government debt and put the country on firmer financial footing. But the Gulf States, including

Saudi Arabia and Kuwait, hold large amounts of Iraqi debt that they have not forgiven.

The United States is currently working with the United Nations and other partners to

fashion the “International Compact” on Iraq. The goal is to provide Iraqis with greater debt

relief and credits from the Gulf States, as well as to deliver on pledged aid from international

donors. In return, the Iraqi government will agree to achieve certain economic reform milestones,

such as building anticorru